In a business that hates hierarchy, Tweedy learned that someone has to be boss.
BY KEITH GRIFFITH
It’d be hard to imagine a place that captured the rock ’n’ roll ethos better than the Wilco loft. The massive open space spreads across the entire third floor of a nondescript brick building in Irving Park, but guitars, amps, and recording equipment overwhelm the space. Across from a cluster of bunk beds, Jeff Tweedy, Wilco’s frontman and arguably Chicago’s most iconic indie rocker, is sitting at a glass table, doing something that’s not very rock ’n’ roll at all: talking business.
“There’s a widely held belief among musicians, and maybe artists in general, that there’s some zero-sum game being played, that it’s a compromise to even think about business as being a part of what you do,” Tweedy says. “I think our approach is that there’s another way to be creative. How we run our business is another thing to think about creatively.”
The Wilco loft headquarters a band that’s earned a reputation as one of the most independent acts in rock ’n’ roll. But it’s also where Tweedy, 45, has established himself as one of the music business’s most innovative entrepreneurs.
Revenue and profit numbers are hard to come by, but it’s clear that Tweedy has built Wilco into a thriving enterprise — even as the music business has seen traditional revenue streams evaporate. Industrywide, record sales have fallen 58 percent in the past 20 years, as digital formats like Apple’s iTunes store and music streaming services like Spotify steadily replace higher-profit sales of physical albums.
But Tweedy has beaten a path toward financial autonomy, establishing himself as the band’s boss, removing middlemen and asserting full rights over the band’s music, merchandise and tour sales.
Wilco grossed $9 million in concert ticket sales in 2012, says Gary Bongiovanni, the editor-in-chief of industry tracker Pollstar. Wilco’s online store, where fans can buy a book of Tweedy’s poetry, a dog collar that matches his guitar strap and Wilco onesies, grosses well into the six figures annually, say insiders. And when Tweedy licenses new Wilco tracks for movies and commercials, he doesn’t have to split the proceeds with a label — he fired Wilco’s in 2011.
It wasn’t always this way. It’s taken more than 20 years for Tweedy to build the needed industry expertise and a devoted fan base. Forging independence has meant learning to fire friends, eschew hefty advances, and build out infrastructures for touring, marketing and merchandising.
“Tweedy never set his feet in concrete with his music, but wanted to keep changing, keep evolving,” says rock critic Greg Kot, author of the 2004 Tweedy biography, “Wilco: Learning How to Die.” “I don’t think business has been any different.”
In an industry where authenticity and commercial viability are supposedly at odds, Tweedy accepts the mutually dependent relationship between the set list and the balance sheet. But at times he’s invoked the ire of purists, who accuse him of compromising his art. When he licensed four Wilco songs for a Volkswagen TV campaign, the Tribune ran an opinion piece headlined, “Does VW deal make Wilco a sellout?”
Tweedy is unapologetic. “I think about telling my dad, who worked for 46 years on the railroad, ‘Somebody offered me $100,000 to put my song in a movie, and I said no because it’s a stupid movie.’ He would want to kill me,” Tweedy says. “The idea of selling out is only understandable to people of privilege.”
Like many entrepreneurs in the arts, Tweedy had to learn the hard way to take business seriously. Before founding Wilco in 1994, Tweedy played in alt-country group Uncle Tupelo, where he says profits were anathema. “You kept everyone who’s making money, the idea of making money, at arm’s length,” Tweedy says. “But when Uncle Tupelo ended, it became very obvious that we were in a business, because we owed people money.”
It was a lesson he didn’t need to learn twice. After putting together a final Uncle Tupelo tour to pay off the band’s debt, Tweedy resolved to stay out of the red. “Bills get paid first, we get paid last, and we live within our means — that was the basic idea,” he says.
When Tweedy signed Wilco’s first record deal in 1995, with Warner Bros. subsidiary Reprise Records, he refused big cash advances for tour support and recording, preferring to keep the band’s debt obligation low. It went against the prevailing wisdom of the day, when many bands took as much cash as their labels would shell out, gambling that labels would do heavy album promotion to recoup the advances.
“In the old days there was this fictional bubble that artists lived in, like we weren’t affected by the laws of commerce,” says Damian Kulash, the OK Go frontman who left EMI in 2010 to form his own independent label. “You were protected from those realities by supposedly benevolent labels. We all know the terms of those agreements were pretty one-sided, but you paid that price so you could live in the bubble.”
Tweedy’s rejection of big advances would play a key role in Wilco’s drive toward independence. In 2001, the band produced a record that the brass at Reprise considered commercially unviable and declined to release. Tweedy held his ground, refusing to change the songs. Reprise canceled the band’s contract.
“They allowed us to walk away with the record, and that would have been much more difficult if they’d had a million dollars or multiple millions invested in the band,” Tweedy says. “We would have been forced one of two ways: to change the record to their liking, or to wait indefinitely until a point where our contract would allow us to leave.”
The record that Reprise turned down, “Yankee Hotel Foxtrot,” later went gold, selling more than 674,000 copies after its 2002 release under a new contract with Nonesuch Records, also a Warner Bros. subsidiary.
After signing with Nonesuch, Tweedy’s operation took on more and more of the duties traditionally handled by a record label. His team, led by Wilco’s longtime manager Tony Margherita of Tony Margherita Management in Easthampton, Mass., began handling the band’s marketing and publicity. They used the Wilco loft to record songs and warehouse merchandise. All they really needed from Nonesuch was distribution. That degree of self-sufficiency — and Wilco’s established, loyal fan base — meant that when Tweedy’s contract with Nonesuch expired in 2011, he was in a strong position to renegotiate its key terms.
“Once [the Nonesuch contract] ran out, being free agents, it would’ve been nuts for them to go back to a traditional deal given the cache they have,” Kot says.
Tweedy made Nonesuch an offer that was anything but traditional — take the 20 percent cut on album retail that Wilco had been getting, and Wilco would take the label’s old 80 percent cut. “They didn’t really want to entertain that,” Tweedy says. “But it didn’t seem unrealistic to us, and it wasn’t unrealistic, ultimately.”
After parting amicably with Nonesuch, Tweedy struck out on his own, founding dBpm Records as the label’s sole investor. His new distribution deal with independent label ANTI- gets Wilco roughly the 80 percent split they’d sought. After 15 years on major labels, Wilco finally released an album on their own, 2011’s “The Whole Love.”
Ken Waagner, a digital strategy consultant who worked with Tweedy from 1999 to 2011, sees the major labels’ inherent advantages fading, as bands find new ways to connect directly with fans. “What technology does is take away the gatekeeper,” Waagner says. “Now, it comes down to being a smart label, and you don’t have to be a major to be smart.”
According to Margherita, Wilco’s manager, the finances bear that out. Although overhead is higher, Wilco makes more per unit on album sales, and can keep every dime on film and commercial licensing agreements, instead of sharing the 50 percent cut that Tweedy says labels take. So why doesn’t every band start their own label?
“Imagine you have a chance to work a steady job, with a salary, health insurance and some semblance of security, or to risk starting your own business and be an entrepreneur,” Margherita says. “All of the same risks and rewards apply.”
There are also significant barriers to entry. Tweedy has spent years stocking the Wilco loft with studio equipment and building relationships with recording engineers and sound mixers. The band has a cash reserve large enough to cover startup costs for tours.
And they have a fan base that they can rely on. In 2012, they played to average audiences of 3,100, with tickets around $50. Touring expenses, which for Wilco’s domestic gigs include two buses and a crew of about 20, typically run about 60 percent of gross, according to Pollstar’s Bongiovanni. “They have real expenses, but they have a significant following that can support that,” he says.
Both the early call to turn down big advances from Reprise and the decision to break from Nonesuch were ultimately up to Tweedy, since the record contracts were with him alone.
But initially, Tweedy was a reluctant boss. A 1995 band agreement, which later surfaced in court records, shows that he originally tried to structure Wilco as a collective enterprise. The four original full-time members owned equal shares in Wilco World Tours Inc., the band’s first business entity. The agreement gave Tweedy no special authority, other than control of the Wilco trademark.
“I didn’t want to be the boss. I didn’t want to be the guy who was looked at as ‘other,’” Tweedy says of Wilco’s early years. “I did a lot of things to try to institutionalize a band concept and a band idea that were counterintuitive, business-wise. This was probably a period before I fully embraced the idea of growing up.”
Personnel issues plagued Wilco early on, with half the roster turning over before 1999’s “Summerteeth,” but Tweedy was reluctant to actively manage the turmoil. In early 2001, when he decided to replace drummer Ken Coomer, a charter member who came over from Uncle Tupelo, Tweedy had Margherita make the phone call.
A letter followed from the band’s attorney, instructing Coomer to sell back his shares in the band’s business entity at par value.
“I’ve regretted that,” Tweedy says. “I assumed that I would be able to call him afterwards and talk to him, but of course that didn’t happen.”
From that point on, he took his responsibilities more seriously. “I made the realization that, whether I take charge or not, I’m in charge,” he says. After friction with multi-instrumentalist Jay Bennett during the recording of “Yankee Hotel Foxtrot,” Tweedy decided to let Bennett go in the summer of 2001. He met Bennett in the loft and broke the news personally.
“If you wanted to pinpoint a moment where I was doing something boss like and mature, that would have been it,” he says, then looks away. Though Tweedy does not mention it, Bennett died in 2009. “‘Boss like’ sounds terrible, but you know what I mean.”
Since then, Tweedy has embraced full leadership of Wilco. Shortly after firing Bennett, as Wilco was entering the new contract with Nonesuch, Tweedy incorporated two new companies to run the band’s business. He owns them outright, and employs the other band members through negotiated work agreements. After a decade of high turnover under the former shareholder setup, Wilco’s lineup hasn’t changed since 2004.
“There’s a chemistry that works itself out in collaborations, so it’s not like I’m sitting there as a gatekeeper, saying, ‘OK, that’s a good idea, that goes through.’” Tweedy says. “But the buck has to stop somewhere, creatively and otherwise.”
Link:
http://www.chicagogrid.com/features/wilcos-jeff-tweedy-learned-grow-start-firing-friends/
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